Algorithmic Pricing And Competition Law In India: Can Artificial Intelligence Facilitate Tacit Collusion In Digital Markets?
Rohith. M, Muthukumar. A & Prathesaa. R
ABSTRACT
Firms across digital markets increasingly delegate pricing decisions to artificial intelligence (“AI”) systems that observe rivals’ prices and adjust in real time. Experimental economics literature and, more recently, findings by the Competition Commission of India (“CCI”) itself, suggest that such systems can independently converge on supracompetitive prices without any human agreement, communication, or shared intent to restrain trade.
This paper examines whether Section 3 of the Competition Act, 2002, as amended in 2023, is doctrinally equipped to address this phenomenon. It distinguishes four categories of algorithm-facilitated coordination algorithm-as-implementation of an existing human agreement, hub-and- spoke coordination through a shared third-party algorithm, signalling through parallel but independently deployed algorithms, and fully autonomous tacit collusion between self-learning pricing agents and tests each against the statutory requirement of an “agreement” and the evidentiary standard the Supreme Court has developed in Rajasthan Cylinders and Containers Ltd. v. Union of India and the cement cartel litigation. It argues that while the 2023 amendment’s hub-and-spoke proviso captures the second category, and ordinary agreement doctrine captures the first, the third and fourth categories the ones AI most distinctively enables sit outside the current framework’s conceptual reach, which still anchors liability to a demonstrable meeting of minds.
Drawing on the CCI’s October 2025 Market Study on Artificial Intelligence and Competition, the Ninth and Third Circuits’ divergent rulings in Gibson v. Cendyn Group and Cornish-Adebiyi v. Caesars Entertainment, the United States Department of Justice’s 2025 settlement with RealPage, and California’s Assembly Bill 325, the paper situates the Indian position within a rapidly developing comparative landscape. It concludes that India need not, and should not, legislate a blanket presumption that algorithmic parallelism is collusive; instead it proposes a calibrated response combining a rebuttable evidentiary presumption keyed to specific technological “plus factors,” mandatory algorithmic disclosure obligations modelled on the CCI’s own self-audit guidance, and enhanced regulatory capacity within the Commission to interrogate pricing models directly.
Keywords: algorithmic collusion, tacit coordination, Competition Act 2002, hub-and-spoke cartels, Section 3, artificial intelligence, dynamic pricing, comparative antitrust
